When you put your extra cash in a savings account, you absolutely want to see it do well and earn some interest. It can be a frustrating thing to see your extra funds sitting in a savings or checking account and often earning mere pennies in interest. In fact, in this day and age, you might even feel that your finances are going negative due to inflation. According to SoFi, there is actually a way to get around this. “If you’re looking for a low-risk place to put your cash that pays more interest than you’re currently getting, you may want to consider opening a high interest savings account,” SoFi recommends. Of course, this all begs the question: just what is the maximum interest gain on a savings account of this type? Here are some things to consider:
What Of The Interest?
One of the most interesting things about savings would have to be the interest (no pun intended). Unfortunately, in this day and age, the interest in most savings plans is, in a word, abysmal. Indeed, most banks will only pay you a rate of .01%.
Sadly, that just isn’t very good. In a nutshell, that means that with a savings account worth $100, you will receive an interest rate of just one penny in a year’s time. A penny can maybe help you make a change on a transaction for tax on a coffee, but that’s about it.
On the other hand, If you place that money in a high-yield savings account, you will receive about fifty cents after a year. That might get you about thirty minutes of parking if you live in a larger city.
What About $1,000?
Of course, if you have a thousand dollars to invest, surely putting it in a regular savings account would garner you a bit more money in interest after a year, right? Well, think again. $1000 in a regular savings account at .01% interest would only net you an annual return of roughly about ten cents tops. If you place that money in a high-yield account, you will usually gain about five dollars on your annual return. Nowadays, you might be able to get a gallon of gas for that amount in a few places.
All right, let’s up the ante a little. What about $10,000? In that case, if you place the $10,000 into a regular savings account earning just 0.01%, you are looking at a balance of $10,001 after one year. That’s barely enough to buy a soda nowadays. Interestingly enough, if you place that amount in a high-yield savings account after the end of one year, it will garner you an amount of $10,050. That’s much better interest for sure.
SO, in answer to all of the questions regarding what is the maximum interest gain on these savings, you really would do well to go with a high-yield account instead of a regular savings account. It’s as simple as that.